However, it expects that the deficit will be lower by December, due to an influx of taxes towards the end of the year. By that time the government expects these figures to be on target.
The Department of Finance said it believes accelerated spending on capital projects and the National Development Plan are responsible for much of the deficit.
A lower tax take in relation to house sales reflects a slowdown in the market, with Capital Gains Tax down on forecasts, raising €1bn up to June of this year. Stamp Duty brought in €1.6bn, which was €97m below Government expectations.
The Exchequer figures back up numbers released by the Central Statistics Office today that show house building has stagnated, with growth in the construction sector limited to commercial and infrastructural projects.
Earlier the Economic and Social Research Institute predicted that housing investment would fall by by 4.7% this year and 6.1% in 2008. The ESRI believes house prices will fall by 3% this year, but will stabilise next year.
Following the release of the exchequer figures, Finance Minister Brian Cowen has warned that there is no room for complacency on the government finances.
Mr Cowen said the latest figures show that the fundamentals of the Irish economy are sound. He said the priority now is to continue a mix of policies to maintain growth and tackle inflation.
The finance minister warned against creating a cycle where wages chase prices. He said the current softening of the house market was a necessary correction.
Mr Cowen predicted the number of new house completions would fall from 88,000 last year to between 70,000 and 75,000 this year.
However he said any reduction of jobs in residential construction projects could be offset by employment growth on infrastructural projects under the public capital programme.
